Trend and Momentum Indicators

Moving averages, MACD, RSI, Stochastic, ADX, CCI and more: how each indicator is calculated, how to read it, and where it fails.

Lessons

  1. What Indicators Really Do: Indicators are math applied to price. Learn what they can and cannot tell you.
  2. Simple Moving Average (SMA): The average of the last N closes, used to see trend direction and dynamic support.
  3. Exponential Moving Average (EMA): A moving average that weights recent prices more heavily.
  4. Moving Average Crossovers: The golden cross, death cross and fast-slow crossover systems.
  5. MACD: Moving Average Convergence Divergence: A momentum indicator built from two EMAs, a signal line and a histogram.
  6. RSI: Relative Strength Index: A 0 to 100 oscillator that measures the speed of price moves.
  7. Stochastic Oscillator: Compares the close with the recent high-low range to show momentum.
  8. Commodity Channel Index (CCI): Measures how far price is from its average, in units of mean deviation.
  9. ADX and the Directional Movement Index: ADX measures trend strength, not direction.
  10. Parabolic SAR: A trailing stop-and-reverse system plotted as dots.
  11. Supertrend: An ATR-based trend line that flips when price closes beyond it.
  12. Williams %R and Rate of Change: Two simple momentum tools and how to read them.
  13. Awesome Oscillator and Momentum Histograms: A histogram of the difference between two simple averages of the median price.
  14. Lag, Noise and Overfitting: Why indicators fail and how to avoid curve fitting.
  15. Building a Simple Indicator System: Combine one trend tool, one momentum tool and price levels into a rule set.